Position sizing decides how much you risk on each trade — and it matters more than entry signals. Size wrong and one loss can end you; size right and losing streaks are survivable. Here is the definitive guide.
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Why It Matters
Most account blow-ups come from oversized positions, not bad analysis. Sizing connects every trade to a fixed risk amount.
The Formula
Position size = (Account × Risk %) ÷ (Stop distance). Example: ₦1,000,000 account, 1% risk = ₦10,000; stop 100 pips away → size ≈ ₦100/pip.
Rules That Protect You
- Risk 1–2% of account per trade.
- Never increase size to 'get back' losses.
- Scale down in volatile or news conditions.
- Cap total exposure across simultaneous trades.
FAQ
What percent should I risk per trade?
Most professionals recommend 1–2% maximum.
Does position sizing guarantee profit?
No — but it guarantees you survive long enough for your edge to work.
Related: 10 Investor Controls and Forex Success.